ASIC has permanently banned former Morgans client adviser, Michael Gordon McIlwraith Taylor, from working in the financial services sector

A COSTLY and embarrassing debacle has been playing out quietly behind the scenes at Morgans stockbroking.

ASIC has permanently banned a former Morgans client adviser. Picture: iStock

COSTLY DEBACLE

A COSTLY and embarrassing debacle has been playing out quietly behind the scenes at Morgans stockbroking.

The corporate watchdog announced this week that it had permanently banned a former Morgans client adviser, Michael Gordon McIlwraith Taylor, from working in the financial services sector.

Taylor was fired in late 2015 after spending 11 years in the firm’s Caloundra office.

ASIC revealed in a public statement that between 2007 and 2015 Taylor inappropriately borrowed about $1.2 million from 16 clients to bankroll his own options investments.

He also “engaged in misleading and deceptive conduct’’ when he failed to consider the personal circumstances of five clients before entering into options trading on their behalf, the regulator said.

As a result, ASIC concluded that Taylor “was not competent, inadequately trained and not of good fame and character’’.

CLIENT PAY OUTS

SO, GIVEN that withering critique, how did this bloke get a gig at Morgans, which claims to be Australia’s biggest retail stockbroking outfit with 500 authorised reps and more than 300,000 clients?

Brisbane-based MD John Clifford wasn’t able to shed any light on that question when he rang City Beat for a chat yesterday.

He did tell us that a Morgans “compliance team’’ stumbled across Taylor’s wrongdoing, which triggered his dismissal and a phone call to ASIC.

Following an independent investigation, Clifford also revealed that Morgans launched an ongoing remediation scheme for affected clients who received “inappropriate advice’’.

“We’re very concerned that any wrongdoing is made right,’’ Clifford said.

But he refused to divulge how much will be paid out or how many punters can expect a cheque in the mail.

LEGAL HEADACHES

ONE of Taylor’s former colleagues in the Caloundra office told your diarist that the firm was “still dealing with the fallout’’ 2½ years after Taylor’s departure. He’s not wrong.

Among the headaches are two lawsuits which have been filed in Brisbane District Court by dudded investors who allege they suffered huge losses thanks to Taylor’s advice.

One of the damages claims was filed last month and the other one lobbed in May last year. Both name Morgans and Taylor as defendants but neither quantify how much money they are hoping to recover.

Neither Morgans nor Taylor have filed a defence in the cases, which have not yet been served on the stockbroking firm.

That might explain why Clifford was unaware of the legal challenges when City Beat asked about them.

More bad news is pending, as well.

Sources say at least two more lawsuits are about to be filed against Morgans and Taylor. Another three or four parties are also considering legal action.

BOILERPLATE

AFTER we started asking a few questions about this sordid tale, Morgans rushed out a brief media release yesterday that had plenty of predictable boilerplate material but left lots of questions unanswered.

“At Morgans, our priority is to ensure our advisers at all times act in the best interests of our clients,’’ the blurb said.

“We will not tolerate any actions which do not comply with financial services laws ... We have assisted ASIC throughout its investigation, and fully support the regulator’s action in this case.’’

SNOWBALL INVESTING

TAYLOR, a 45-year-old native of Rockhampton, could not be reached for comment yesterday.

It’s understood that he is now living in a northern suburb of Brisbane.

Corporate records show he launched Snowball Investment Company in 2004 and it’s believed this vehicle was used for some or all of his options trading. It has nearly $450,000 in paid shares on issue owned by 14 investors, including Taylor.